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A policy rider is an optional/additional benefit that can be added to a policy for an extra premium.

Legally, it is defined as a document that amends the policy or certificate. It may increase or decrease benefits, waive the condition of coverage, or in any other ways amend the original contract.

Traditional policies usually leave little room for modification or customization, except for deductibles and amount of coverage. Riders allow policyholders to create a life insurance policy that fits their specific needs.

Rider that allows payment of a portion of the face amount prior to the death of the insured, if the insured is diagnosed with a terminal illness or injury.

Accidental Death Benefit

A benefit in addition to the face amount of a life insurance policy, payable if the insured dies as the result of an accident, which is sometimes referred to as “double indemnity”.

Annual Renewable Term Rider

Term life insurance that is “blended” into the policy, which reduces the premiums and will reduce the cash value.

Child Rider

A rider that provides insurance to the insured’s child(ren) that provides financial protection for the future.

Cost-of-Living Rider

Benefit that can be added to a life insurance policy under which the policy owner can purchase one-year term insurance equal to the percentage change in the consumer price index, with no evidence of insurability.

Disability Income Rider (generally on older policies)

This rider typically pays a monthly benefit of 1 percent of the death benefit of the coverage, in the event of permanent or total disability.

Guaranteed Insurability Option

Allows the purchase (optional) of additional coverage at certain intervals without providing evidence of insurability, meaning no underwriting.

Living Benefit Rider

A rider that allows policy owners who are terminally ill or who suffer from certain catastrophic diseases to collect part of their life insurance benefits before they die, primarily to pay for the care they require.

Other Insured Rider

Rider that provides coverage to an eligible business or family member other than the insured.

Spousal Rider

Rider that provides coverage to the insured’s spouse.

Terminal Illness Rider

See living benefit rider above.

Waiver of Cost of Insurance Rider (Universal life policies, generally)

Waives the cost of insurance in the event the insured becomes totally and permanently disabled during the life of the policy.

Waiver of Premium Rider (Term and whole policies, generally)

Provides that in the event the insured become totally and permanently disabled before a specified age, premiums on the contract will be waived during the continuance of the contract.

Keep in mind that many of these riders are more profitable for the insurance insurer and each insurer only offers certain riders per policy.

Noted insurance author Tony Steuer has spent over 25 years in the life insurance industry. Steuer’s leadership roles include serving on the California Department of Insurance Curriculum board and the National Financial Educator's Council Curriculum Advisory Panel as well as having served as President of the San Francisco Chapter of the American Society of CLU & ChFC, President of the leading Life Insurance Producers of Northern California, and as a board member of the San Francisco Life Underwriters Association. Mr. Steuer is the author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, The Questions and Answers on Life Insurance Workbook and The Questions and Answers on Disability Insurance Workbook - the first two were awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy. Steuer holds a Chartered Life Underwriter (CLU) designation and also holds the Life and Disability Insurance Analyst License, a designation that is held by less than thirty people in California.

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